For a contract to exist between two parties, there must be, inter alia, intent to enter into reciprocal obligations, agreement as to the nature of those obligations, and assent thereto. Evidence of assent might include evidence of oral undertakings, complete or partial fulfilment of the contractual undertakings, and formal acts of signing written statements.
Historically, the greater part of commerce was conducted face-to-face. Most contracts were made orally and evidence of assent was obtained from human witnesses. Longer-range contracts would more typically be effected on paper. In this case, the affixing of a seal or a handwritten signature would constitute physical evidence of a solemn act of assent to the terms of the contract. In particularly solemn situations, an independent third party, e.g., a notary, would likewise attest his observation of the solemn act, further strengthening the evidence of assent.
With the advent of modern telecommunications, commercial entities increasingly operate on a national or international basis. In the course of their business, companies rely upon contracts with a greater number of parties, often over an ever wider geographical area. However, the development of large-scale commerce has not yet accommodated the need to gather and preserve evidence of assent to a commercial transaction. In the case of written contracts for example, evidence of assent—the handwritten signature—has typically been handled by means of the nineteenth century postal system.
In recent years, attempts have been made to address the problem of evidencing assent to commercial transactions in the electronic commerce domain. Most “online” transactions are consummated by a party clicking on an icon indicating his assent. Early attempts to address the lack of a signature have focused on the issue of the identity of the contracting party. So, for example, the so-called digital signature system relies on the association of secret information with a particular individual or entity. In order to digitally sign a message, one must be in possession of a secret encryption key. While it can be proved that a message cannot be signed without possession of the secret key, the mere existence of a digital signature does not of itself provide any evidence that the secret was not divulged or in some other way compromised. Some proponents of the digital signature system seek to strengthen it by adding a biometric check, which requires an individual to have the specific physical or behavioural attributes of the authorized signatory to gain access to the secret encryption key.
However, such attempts inevitably fail, in that they do not address the more fundamental issue of assent. Handwritten signatures function as indicators of assent because of two cultural conventions. The first is that a signature is understood to indicate assent to the preceding text of a paper document. The second is that the making of a handwritten signature is culturally associated with the undertaking of a solemn commitment. Digital signatures enjoy neither of these cultural associations. In the first place, the only association with the text of the document is a mathematical one which the signatory has no means of verifying. In the second, the sequence of actions required to perform a digital signature are not a matter of public convention, nor even of common knowledge. It would be easy for a signatory to repudiate a digital signature, either by alleging that he was ignorant of the meaning of the signed data, or denying that the steps he took to provide a digital signature expressed assent. In order to establish either of these points, therefore, a digital signature system is reliant on other, extrinsic evidence.
A quite different approach was taken by those inventors who sought to employ computer technology to gather evidence of informed consent to undergoing medical procedures. For example, in U.S. Pat. No. 5,857,028, a system is described that is equipped with speech output facilities which, having presented the affirming party with the content of the affirmation, obtained evidence of his comprehension by inducing him to answer a questionnaire by pressing appropriate keys on a computer keyboard and signify his final acceptance by giving a fingerprint sample. Another example is U.S. Pat. No. 6,149,440, which describes a similar system where the affirming party is invited to submit a digitally recorded handwritten signature. Such systems, however, can only be applied in very specialized circumstances and are ill suited to general-purpose declarations and agreements. Further, the evidential link between the interactions (such as keystrokes) of the affirming party and the “signing” act (e.g., the giving of a fingerprint sample or a digitized handwritten signature) is not self-evident, and would need to be supported by expert testimony in a forensic context. Finally, these methods cannot make the evidentiary record available to the interested parties.
In U.S. Pat. Nos. 5,544,255, 5,647,017, 5,818,955 and 6,064,751, Smithies and Newman proposed a system which sought to overcome most of these defects. The system described in the Smithies and Newman patents enabled handwritten signatures to be created in association with electronic documents and communicated within the electronic domain. The described system invited the signatory to sign in the context of a display showing a statement of the import of the message to be signed. This statement was then stored together with the signature data. The proximity of the statement of intention and the conventions surrounding the execution of a handwritten signature provided good evidence of assent to the contents of the signed message.
Subsequently, in U.S. Pat. No. 6,091,835, Smithies et al. described a system that was not restricted to the use of handwritten signatures, but could equally use speech recording, fingerprint sampling, or the input of a password or digital signature. This system sought to overcome the limitations of non-standard signing techniques by enabling prompts to be displayed to the signatory explaining the significance of what he was being asked to do. Evidence of informed consent was produced at every stage: the system logged all the prompts displayed to the signatory and all the signatory's interactions in an electronic transcript. However, the matter to be signed was necessarily expressed in digital form, as was the assent to the matter, and the two were inextricably linked.
Although the foregoing solutions attempt to provide evidence of informed consent, they suffer from severe limitations. First, they require the signatory to have access to specialized hardware. Second, they require that the signatory have special software installed on his computer. Third, they have no facility for making the evidence of assent available to the interested parties.
Their fourth and most serious shortcoming is one that is shared by all forms of electronic signing proposed to date. That is that they are bonded to a specific digital embodiment of the signed data. A conversion of the signed data from one electronic format to another (which frequently occurs as a result of software upgrades) will invalidate an electronic signature without necessarily changing the meaning of the data. This has two consequences. The first is that over the course of time, digital embodiments of documents such as contracts are apt to change. Custodians of archives of electronically signed documents are thus faced with the dilemma of either maintaining those documents in their original, archaic form or converting them to a more up-to-date form and thus invalidating the electronic signature. The second consequence is that existing electronic signing procedures cannot be used to signify acceptance of terms which are communicated by means of a paper document. They can only be used to sign something which is in digital form.